Please review the historical performance and projections on the Home Depot Value Line page, the spreadsheet, and the pro forma balance sheet and income statement. Submit a complete thorough ANALYSIS of the pro forma discussing the majority of the assumptions made to create the pro format and argue with or against those assumptions and present alternative assumptions if any.

Home Depot Inc (NYS: HD) As Reported Annual Balance Sheet m Cash 8 cash equivalents $2,270.60 Receivables, net $2,141.66 Merchandise inventories $12,912.49 Other current assets $633.28 Total current assets $18,458.02 Net property 81 equipment $21,510.81!r Notes receivable $0.00 Goodwill $2,093.00 Other assets $1,235.00 Total assets $43,296.89 Shortterm debt $T10.00 Accounts payable $7,324.74 Accrued salaries 81 related expenses $1,515.39 Sales taxes payable $519.56 Deferred revenue $1,731.88 Income taxes payable $25.00 Cument installments of longterm debt $542.00 Other accrued expenses $2,381.33 Total current liabilities $14,249.90 Longterm debt, excluding current installments $22,349.00 Other longterm liabilities $1,881.27!r Deferred income taxes $296.00 Total liabilities $39,256.66 Gon'rnon stock $88.00 Paid-in capital 510,391.25 Retained earnings $40,164.40 Accurmlated other comprehensive income [loss] {$86100} Treasurz stock, at cost $46,000.00 Total stockholders' equity $3,726.55 Total liabilities and stockholders' e u' $43,033.31 EFN $263.58 As Reported Annual Income Statement Net sales $98,950.00 Cost of sales $65,208.05 Gross prot $33,741.95 Selling, general 8 adninistrative expenses $17,811.00 Depreciation 8 amortization expense $1,781.10 Total operating expenses $19,592.10 Operating income $14,149.85 Interest 5 investment income 598.95 Interest expense $989.50 Interest other income ex rise , net $890.55 Earnings before provision for income taxes $13,259.30 Provision lbenet! for income taxes $4,813.13 Net earnings 58,4481]Ir Note: Manual calculation mode is on. 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Facts and Assumptions Year 2015 2016 Net sales Growth rate in sales Cost of goods soldet sales Gen., sell,, and admin. expenseset sales Longterm debt Current portion longterm debt Interest rate Tax rate Dividend/earnings after tax Current assetset sales Net fixed assets Current liabilitieset sales Owners' equity INCOME STATEMENT Year 2014 2015 2016 Net sales $ 25,766 $33,496 Cost of good sold 22,159 $28,806 Gross profit 3,607 $4,689 Gen., sell,, and admin. exp. 3,092 $3,685 Interest expense 231 $3 Earnings before tax 285 $672 Tax 128 $33 Earnings after tax 156 $370 Dividends paid 78 $1 Additions to retained earnings 78 $185 BALANCE SHEET Current assets 55 7,472 $9,714 Net fixed assets 280 $2 Total assets 7,752 $9,984 Current liabilities 3,736 $4,823 Longterm debt 660 $560 Equity 1,808 $1,934 Total liabilities and shareholders' equity 6,204 $7,317 EXTERNAL FUNDING REQUIRED $ 1,548 $2,666 HOME DEPOT NYSE-HD PRICE 159.91 RATIO 21.2 PIE RATIO 1.10 PLOP 2.5% VALUE TIMELINESS 2 Raised 6/2/17 43.9 32 8 29.4 SAFETY 1 Raised 10/5/07 26. 6 74.0 2020 |2021 2022 TECHNICAL 3 Lowered 8/18/17 -320 BETA .95 (1.00 = Market) Shaded area indicates recession 2020-22 PROJECTIONS Gain High - 100 160 Insider Decisions -60 Institutional Decisions % TOT. RETURN 8/17 3Q2016 402016 -18 to Buy HId's(000) 859411 864893 944962 85.3 22.83 27.31 33.86 38.38 46.11 45.77 38.84 41.90 45.80 50.37 57.11 63.64 78.63 86.70 93.75 Sales per sh A 09.50 2.93 2.81 3.07 8.07 12.05 2.26 2.72 2.79 2.27 1.78 1.66 2.03 2.47 4.21 5.96 4.56 5.34 9.20 3.10 3.76 6.45 7.35 104 1.56 8.25 Earnings per sh AB 9.90 95 1 16 2.36 2.76 3 56 4.45 Div'ds Decl'd per sh C 5.45 11.64 2.60 2345.9 2293.0 2373.0 2158.7 2124.0 1970.0 1690.0 1696.0 1698.0 1623.0 1537.0 1484.0 1380.0 1307.0 1252.0 1203.0 1150.0 1120.0 Common Shs Outst'g D 1050.0 35.6 22.6 16.7 16.7 14.7 13.7 15.4 15.3 15.6 15.0 17.9 20.2 19.1 22.1 18.0 1.82 .7 .86 1.02 .99 1.14 1.08 1.15 1.8% 3.5% 2.1% Avg Ann'l Div'd Yield 3.1% CAPITAL STRUCTURE as of 7/30/1 77349 71288 67997 70395 74754 78812 83176 8 99700 105000 Sales ($mill) A 175000 Total Debt $24967 mill. Due in 5 Yrs $6425 mill. 33.7% 33.9% 34.3% 34.5% 13.7% 14.6% 34.2% 34.2% 34.0% 34.1% Gross Margin 34.3% T Debt $24422 mill. 11.6% 8.6% 10.1% 11.0% 11.7% 15.1% 16.0% 16.3% 16.4% Operating Margin 16.5% (Total interest coverage: 13.9x. LT int earned: 2274 2248 2269 2274 2284 2290 Number of Stores 2305 13.9x ) 6848 8745 10395 Leases, Uncapitalized Annual rentals $868 mill. 36.4% 36.3% 36.3% 36.3% Income Tax Rate 36.3% No Defined Benefit Pension Plan 4.2% 4.3% 5.0% 5.5% 8.4% 8.8% 9.1% Net Profit Margin 9.0% pfd Stock None 16869 20888 22349 9 24500 25000 Long-Term Debt ($mill) 25000 6316 4333 3000 2500 Shr. Equity ($mill) 1000 Common Stock 1, 178,817,584 shs. 2.5% as of 8/15/17 NMF NME MARKET CAP: $189 billion (Large Cap) 8.2% 14.5% 17.8% 21.7% 26.3% 43.0% 65.9% 108.4% 183.6% 9.5% 12.6% 41% 51% 54% 16.5% 25.1% 38.7% 60.4% 105.1% NMF Return on Shr. Equity 37% 42% 41% 44% 48% 54% All Div'ds to Net Prof 4830 BUSINESS: The Home Depot, Inc. operates a chain of 2,282 retail ing, heating, and electrical; paint & furniture; seasonal and specialty nventory (LIFO) Other U.S. and in Canada and Mexico (as of 7/30/17). Acquired Hughes own less than 1.0% of common; Capital World Investors, 6.8% Current Assets Supply in 1/06. Average store size: 104,000 sq. ft. indoor plus Accts Pa 24,000 sq. ft. garden center. Items stocked: about 35,000. Product corporated: DE. Address: 2455 Paces Ferry Road, Atlanta, Georgia Other lines include building materials, lumber, floor/wall coverings; plumb- 30339. Telephone: 770-433-8211. Internet: www.homedepot.com. The Home Depot delivered another stronger than the numbers suggest, as in- ANNUAL RATES Past Past Est'd '14-'16 quarter of stellar results, as it contin- ventories are tight while demand remains of change (per sh) ued to buck trends in the broader solid. Indeed, home price appreciation, retail space. HD is benefiting from its household formation, and housing turn- 7.5% own internal initiatives to drive growth over have all been supportive. This is a Dividends and a favorable macroeconomic backdrop trend we expect to continue, as consumer Book Value -8.0% 14.5% in which consumers are willing, even confidence is high and the labor market QUARTERLY SALES ($ mill.) A eager, to invest in their homes. The end has been making strides, despite a lack- result was record high quarterly sales and luster August jobs report. All told, we look 2014 19687 earnings for The Home Depot. Specifically, for GDP to rise around 3% in the second 88519 fiscal second-quarter (ended July 30th) half of 2017. This favorable backdrop, com 2016 22762 26472 23154 22207 94595 sales rose 6.2% and comparable-store sales bined with management's efforts to court 2017 23887 2 99700 were up 6.3%, while the metric rose 6.6% professional customers and bolster the 18 25000 29300 25475 25225 105000 for stores in the United States. The num- ber of customer transactions was up 2.8%; store's digital presence and interconnected retail capabilities, should also support Begins Apr.Per Jul.Per Oct.Per Jan.Per the average ticket increased 3.6%; and sales and earnings. In fact, leadership in- 2014 2015 .96 1.52 1.16 1.66 1.10 1.00 sales per square foot rose 5.9%. Demand creased its full-year 2017 guidance, and was broad based across categories and ge- looks for sales and comps to rise 5.3% and 2016 1 97 ographies, and growth in sales to profes- 5.5%, respectively. Share net is forecast to 2017 1.59 7.35 sionals outpaced those to DIY customers. be $7.29 a share. We've raised our call to 2018 8.25 Big-ticket sales (those over $900) were up Cal- QUARTERLY DIVIDENDS PAID C. 12.4% thanks to strong demand for ap- $7.35, as rebuilding efforts in the wake of pliances and flooring. Consequently, share hurricanes Harvey and Irma should give a endar Mar.31 Jun.30 Sep.30 Dec.31 2014 .39 net was $0.05 above our call. short-term boost to results. 2013 Conservative accounts looking to gain .47 .59 59 .47 Looking ahead, we think that the exposure to the housing market, along 2015 .69 .69 69 .59 good times will continue with some income, will likely want to 2016 69 2.76 Home Depot. Recent housing data have been mixed, but this segment is likely take a closer look at this timely stock. 2017 89 Matthew Spencer, CHA September 22, 2017 31st of the following year. 15, $0.12. Totals may not sum due to round- (D) In millions, adjusted for stock splits. (E) Includes intangibles. At 1/31/16: $2,102 Price Growth Persistenc Earnings Predictability THE PUBLISHER IS NOT RESPONSIBLE FOR ANY ERRORS OR OMISSIONS HEREIN. This publication is strictly for subscriber's own, non-commercial, internal use. No part 10 subscribe call 1-800-VALUELINE